Correlation Between Rbc Funds and Touchstone Small

Can any of the company-specific risk be diversified away by investing in both Rbc Funds and Touchstone Small at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Rbc Funds and Touchstone Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rbc Funds Trust and Touchstone Small Cap, you can compare the effects of market volatilities on Rbc Funds and Touchstone Small and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Rbc Funds with a short position of Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rbc Funds and Touchstone Small.

Diversification Opportunities for Rbc Funds and Touchstone Small

-0.6

Correlation Coefficient

Rbc Funds  Touchstone Small

Excellent diversification

The 3 months correlation between Rbc and Touchstone is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Rbc Funds Trust and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap and Rbc Funds is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Rbc Funds Trust are associated (or correlated) with Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Rbc Funds i.e., Rbc Funds and Touchstone Small go up and down completely randomly.

Pair Corralation between Rbc Funds and Touchstone Small

Assuming the 90 days horizon Rbc Funds Trust is expected to under-perform the Touchstone Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Rbc Funds Trust is 1.65 times less risky than Touchstone Small. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Touchstone Small Cap is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,862  in Touchstone Small Cap on September 20, 2024 and sell it today you would lose (29.00) from holding Touchstone Small Cap or give up 0.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Rbc Funds Trust  vs.  Touchstone Small Cap

Rbc Funds Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbc Funds Trust has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Rbc Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Touchstone Small Cap

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Touchstone Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Touchstone Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rbc Funds and Touchstone Small

The main advantage of trading using opposite Rbc Funds and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rbc Funds position performs unexpectedly, Touchstone Small can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Touchstone Small will offset losses from the drop in Touchstone Small's long position.

The idea behind Rbc Funds Trust and Touchstone Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.